Chargeback Outlook- 2023

Backspace Tech
4 min readSep 22, 2023
MasterCard Chargeback Trends-2023

Omnichannel payments are no longer an accessory but rather a necessity as there is a dynamic transformation in how payments can be made. With more and more customers embracing online payment habits, there has been a conscious and deliberate shift towards Card-not-Present (CNP) transactions.

While this shift has opened many avenues for different payment channels, these digital experiences have also resulted in a rise of chargeback volumes. As CNP transactions gain momentum, there is the indisputable fact that the onus of liability has been now transferred to the merchant from the card issuer.

This state does leave us with some questions, such as;

  • What would be the volume of chargebacks in the near future?
  • How will these dynamics contribute to the present and future of chargebacks?
  • Which region will have the highest influx of chargeback and why?
  • How will countries/regions handle this rise?

Well, the latest Mastercard Ethoca Chargeback Trends and Outlook report 2023, answers all these questions and here is our synopsis of the report.

The State of the Union:

According to the report, contactless channels take up almost 50% of global in-person transactions as they offer speed and ease of usage to the customer. Many customers are also willing to shift their bankers if the digital services offered by the bank are not up to their expectations.

This translates to the fact that in today’s world convenience and digital means reign supreme. Ironically, it also indicates that the instances of disputes and chargeback volume are now at an all-time high.

As per Mastercard, the global chargeback volume estimate for the year 2023 stands at $117.47 billion and for every $1 chargeback, the cost would be around $3.60 and entire process would take months to resolve causing a significant drain on resources for the parties involved.

Ever since the pandemic, there has been an uptick of 25% in ecommerce activity worldwide and the number is expected to reach US$3.64tn in 2023 as per the Statista report. This numbers will be further enhanced to 7.3 trillion by 2025.

And CNP fraud is coming up in close competition with values touching over $28.1 billion by the year 2026.

Chargeback Volumes:

As per the report, global chargeback volume is all set to reach 238 million and the 2026 prediction stands at 337 million. But this number varies as per region due to the factors of regulations, both local and international.

Out of this number, the US holds the major prediction of 105 million chargebacks attributable to the slow adoption of 3DS standards. US merchants are hesitant to adopt this standard as they want to avoid any kind of potential sales friction even though 3DS has been proven to reduce fraud. At the same time, the US and Asia Pacific will also witness tremendous e-commerce growth.

When looking at Europe, chargeback volumes will be quite stable as there is implementation of tools like SCA and 3DS to authenticate and process online transactions. Infact, The SCA mandate has significantly reduced card-not-present (CNP) fraud in Europe, contributing to its increased stability.

Factors influencing chargeback growth:

  • Rising e-commerce transactions
  • 3DS adoption rates vary from region to region
  • Subscription payments are on the rise due to ease of digital payments
  • Complexities involved in identifying true fraud vs friendly fraud transactions

Chargeback trends across regions:

The United States of America:

  • In the U.S., there was a significant increase in chargeback volumes in 2020 compared to 2019. This spike was driven by several factors:
  • The rapid growth of e-commerce during the pandemic, leading to more card-not-present (CNP) transactions.
  • Consumers predominantly use disputes to address issues like damaged product receipts.
  • The automated fuel dispenser (AFD) liability shift added to chargeback volumes. Nevertheless, the usage of AFD chip-enabled terminals helped in reducing fuel-related chargebacks, resulting in a slight decrease in 2022.
  • The decline in 2022 may also be attributed to slower CNP transaction growth as in-person shopping resumed. Despite low 3DS (3D Secure) usage, chargeback volumes will remain closely tied to rising CNP fraud rates in the U.S. market.
  • The U.S. is projected to account for over 40% of global card-not-present (CNP) fraud, with expected losses exceeding USD 12.8 billion by 2026.
  • CNP fraud losses in the U.S. are increasing in line with e-commerce growth.
  • 3D Secure (3DS) adoption in the U.S. remains low, with only 2%-4% of CNP transactions using it.
  • Approximately 75% of CNP fraud among digital goods merchants is believed to be first-party fraud.


  • Expected steady chargeback volume.
  • Decrease in chargebacks from USD 2.6B (2019) to USD 1.9B (2026).
  • SCA requirement reduces CNP fraud.


  • Steady chargeback growth expected.
  • Driven by rising retail e-commerce sales.
  • Use of alternative payments and SCA mandates to limit but not eliminate growth.
  • Chargebacks to double, reaching USD 4.5B (2026) from USD 2.1B (2019).

Rest of the World (including Latin America):

  • Significant increase in chargebacks projected.
  • Expected to reach USD 191B (2026) from USD 133.7B (2023).
  • Attributed to growing e-commerce transactions and digitization of experiences.

What we think:

For starters, one point is abundantly clear that chargebacks are here to stay as CNP transactions are all set to steal the spotlight. Friendly fraud is on a consistent upward trajectory that will take issuers and merchants for a spin.

What can be done to manage this situation? Well, that’s where we come in. Our Unified Dispute Management (UDM) is your one-stop solution to automate dispute management right from its source.

Our rule engine will help in combating friendly fraud by deploying a solid framework of network rules and ensures three-level compliance. Armed with automated decisioning and AI powered validation, UDM helps in saving time by automating decisions and seamless document verification.

In the world of real-time payments, UDM offers real-time dispute resolution.

Want to know how UDM can supercharge your chargeback management? Then, get in touch with us today!

Source: Yahoo finance, Statista, Mastercard Ethoca Report 2023.



Backspace Tech

Backspace Tech offers Fintech-as-a-Service to automate,simplify, and disrupt the payment industry by handling chargeback requests through a plug-and-play model.